Indian equity markets are expected to open on a cautious note, even as global sentiment has improved following the announcement of a temporary two-week ceasefire between the US and Iran. While the development has reduced immediate geopolitical risk, its limited duration is tempering conviction, with investors uncertain whether it marks the start of a sustained de-escalation or merely a temporary pause.

Adding to the cautious tone, persistent foreign institutional investor (FII) outflows continue to act as a key overhang. Despite the sharp rally in the previous session, global investors remain selective, suggesting that confidence has yet to fully return.

The most significant positive driver remains the sharp correction in crude oil prices. Brent has fallen by roughly 13–15%, slipping below the $100 mark and stabilising in the $94–97 range. This has improved India’s macro outlook by easing inflation concerns, supporting corporate margins and reducing pressure on the current account. As a result, rate-sensitive sectors such as banking, autos and real estate have gained traction, alongside broader strength in metals and the wider market. The rupee has firmed and bond yields have softened, reinforcing the more supportive macro backdrop.

The Reserve Bank of India’s decision to hold the repo rate at 5.25% with a neutral stance has further underpinned stability, signalling policy continuity without disrupting growth momentum.

However, following the sharp one-day rally, markets appear to be entering a phase of consolidation. Early indications from Gift Nifty point to mild profit-taking, a natural response after a strong move. Global cues remain mixed, while crude prices have edged higher amid lingering doubts over the durability of the ceasefire. Continued regional developments, including activity around Lebanon, highlight that geopolitical risks remain fluid and unresolved.

Institutional flows reflect a similarly mixed picture. Foreign institutional investors (FIIs) remained net sellers to the tune of ?2,800 crore, while domestic institutional investors (DIIs) continued to provide strong buying support, helping stabilise the market. This divergence continues to define the current structure, with domestic liquidity underpinning prices even as global flows remain cautious.

Overall, markets are responding positively to the decline in crude prices, but the absence of strong follow-through buying points to a measured approach. This does not yet reflect a full risk-on shift, but rather a relief-driven recovery tempered by underlying caution.

Technical View

Nifty 50

Nifty 50 remains in a recovery phase after reclaiming the 24,000 mark in the intra-day trade on Wednesday, which now acts as an immediate psychological resistance. A decisive breakout above the 24,300–24,400 zone can extend the move towards 24,500–24,800. On the downside, immediate support is placed at 23,700–23,600, with a stronger demand zone at 23,400–23,300. As long as the index holds above 24,000, the short-term structure remains positive, though momentum requires confirmation from a sustained breakout above resistance.

Bank Nifty

Bank Nifty continues to outperform, supported by strong buying interest and improving macro cues. The index is currently approaching a key resistance zone of 55,800–56,000. A sustained move above 56,000 can trigger further upside towards 56,500–57,600. On the downside, support is seen in the 55,200–54,800 range, which is likely to act as a cushion on declines. The outlook remains slightly positive, but confirmation of strength will depend on a clear breakout above resistance.